When Procurri Corporation Limited (SGX:BVQ) released its most recent earnings update (30 September 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Procurri’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not BVQ actually performed well. Below is a quick commentary on how I see BVQ has performed. View our latest analysis for Procurri
How Well Did BVQ Perform?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to analyze different stocks on a more comparable basis, using new information. For Procurri, the most recent bottom-line is SGD0.8M, which, in comparison to last year’s level, has fallen by a large -89.45%. Since these values are fairly myopic, I have determined an annualized five-year value for Procurri’s earnings, which stands at SGD5.1M. This doesn’t look much better, as earnings seem to have consistently been falling over the longer term.
Why could this be happening? Well, let’s take a look at what’s occurring with margins and whether the whole industry is experiencing the hit as well. Revenue growth in the past few years, has been positive, however earnings growth has been falling. This means Procurri has been increasing expenses, which is harming margins and earnings, and is not a sustainable practice. Viewing growth from a sector-level, the SG electronic equipment, instruments and components industry has been growing its average earnings by double-digit 21.84% over the previous year, . This is a change from a volatile drop of -2.06% in the past few years. This suggests that, in the recent industry expansion, Procurri has not been able to leverage it as much as its average peer.
What does this mean?
Procurri’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. In some cases, companies that face an extended period of diminishing earnings are going through some sort of reinvestment phase in order to keep up with the recent industry disruption and expansion. You should continue to research Procurri to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for BVQ’s future growth? Take a look at our free research report of analyst consensus for BVQ’s outlook.